Huge Market Triggers Foreign Investment in China

China has become the world's largest consumer of machine tools. This is an indisputable fact for nearly a decade.

However, such a large-scale foreign investment in China as in 2011 was the first time in years.

This is based on the following facts.

In recent years, China's machine tools have had a huge import deficit. By 2010, the deficit in China's machine tool industry will reach more than US$10 billion. From the perspective of imports, the net imports of machine tool industry in 2010 increased by US$6.37 billion.

Imports remain high and there is a growing trend. Since 2000, the deficit in the import and export trade of China's machine tool products has increased year by year. By 2010, the total import value of China's machine tool products was US$15.72 billion, an increase of 62.0% year-on-year, and an increase of 27.8% from the highest record in 2008.

The China International Machine Tool Show CIMT, which is held every two years in China, is overcrowded and the booth satisfaction rate is only 40% to 50%. Due to the popularity of exhibitors, this exhibition has been scaled by the third largest machine tool show in the world. Promotion to the first place. At CIMT 2011 in April 2011, half of the more than 1200 exhibitors were international exhibitors, demonstrating a high degree of internationalism.

The market prospects of foreign machine tools, especially high-end products in China, are undoubtedly a huge driving force for foreign companies.

According to the National Bureau of Statistics, according to the National Bureau of Statistics, the ratio of Hong Kong, Macao, Taiwan, and foreign-controlled companies is over 10% in more than 4,000 Chinese machine tool industry enterprises. Among them, there are directly-operated factories in China, including Germany's DMG, Slavonica, Japan's Mitsubishi Electric, Shadiq, the United States Harding, Haas, Sweden Sandvik, Seco, Korea's Doosan and so on.

According to the situation of the top ten companies in the world's machine tools, except Shenyang Machine Tool and Dalian Machine Tool, which are domestic companies, 6 of the remaining 8 companies directly invest in or joint ventures in China. The six companies are: DMG, Yamazaki Mazak, Mori Seiki, Otsuka, Doosan, Agie Charmilles.

The operating conditions of these machine tool foreign companies in China are promising. According to the newspaper's survey, 66% of the foreign-invested enterprises surveyed reported that their sales in the Chinese machine tool market are relatively satisfactory.

Dr. Kapi, Chairman of the Board of Directors of the Jimmite Group, said in April that DMG’s sales in China were 100 million euros in 2010, which accounted for 13% of the total sales of the JM Group. China has become DMG's second largest market after Germany.

Japan's Amada Co., Ltd. is a world-renowned sheet metal processing and processing company. Its chief executive Takagi Takahiro disclosed at CIMT2011 that in 2010, Tianda’s sales in the Chinese market were RMB 1 billion, accounting for 8% of the company’s global market share. In 2011, the company expects that the output value of the Chinese market will increase by 25%.

Kunming Daos is a joint venture between the Czech Republic's Daos and Kunming Machine Tools. It mainly produces planer and horizontal machine tools with high single-unit output value. Since the establishment of the joint venture company in 2005, the joint venture company has sold 100 machine tools in China in the five years to 2010.

Expanding China's Investment Since the 1970s and early 1980s, some foreign companies have invested and built factories in China. According to the survey conducted by the newspaper, 57% of the foreign investors interviewed stated that they have established factories in China.

Take Demaghi as an example. They entered China in the 1990s and now the Shanghai factory has reached 300 people. Amada came to China earlier. In 1982, they invested 18 million U.S. dollars to build three manufacturing bases for machines, molds, and saw blades, covering an area of ​​1200 square meters, which has been nearly 30 years. In the same era, the Swedish SKF Group entered the Chinese market. They entered China in 1986. By 2010, SKF's sales in China had reached 7.3 billion yuan. It has 12 production bases and more than 4,500 employees.

Thanks to the rapid growth of the Chinese market, especially since the financial crisis, when the consumption of machine tools in other countries of the world has been shrinking, the Chinese market is still growing strongly, which makes foreign companies take China as their sales growth point. The survey shows that 58% of the respondents stated that they will have new investment plans in the Chinese market in 2011.

Some foreign companies take products directly to Chinese factories for production. DMG executives stated that they will gradually transfer many products to China for production. For example, DMG's DMU series will be produced in China in the third quarter of 2011.

Some foreign companies simply invest in new plants in China. Johnston Johnston, president and CEO of the SKF Group, said in Dalian in March that SKF will establish a new plant in Jinan, Shandong Province, with a total investment of approximately 590 million Swedish kronor (about 600 million yuan), accounting for Area of ​​16,000 square meters. Tian Tian said that in 2013 it will build a new factory in China.

Doss Machine is a Czech company that produces horizontal machine tools. Due to the successful cooperation of Kunming Daos, Daos headquarters also expanded its efforts in China. In 2011, they established a new sales headquarters in Shanghai to carry out sales and after-sales service for original machine tools. Peter, head of Shanghai Dos Machine Tool Co., Ltd., told the China Industry News that from the period of 1995 to 2005, Doss headquarters sold 50 machine tools in China. However, in five years, the joint venture company achieved twice the sales volume of Daos headquarters in 10 years. The headquarters thus realized the enormous potential of the Chinese market. In 2011, the headquarters established a plan for Shanghai sales headquarters to sell 20 original machine tools. From January to April 2011, Shanghai’s sales headquarters had sold seven to eight units.

Generally optimistic about the Chinese market From the China Industry News reporter's interview with dozens of foreign companies on CIMT2011, they have expressed their good expectations for the Chinese market. The survey results also show the same trend: 67% of the surveyed companies are optimistic about the Chinese market and believe that the future of China's machine tool industry is still very large.

Mr. Giancarlo Losma, chairman of the Italian Association of Machine Tools, Robotics and Automation Manufacturers, and Lai Shiping, chief representative of the Italian Foreign Trade Commission’s Beijing office, expressed the following consensus when interviewed by China Industry News: It is expected that Italian machine tool exports to China will increase by 20% in 2011. . It is understood that China purchased 350 million euros of machine tool equipment from Italy in 2010. At that time, 15% of the Italian machine tool's output value was sold to China, which exceeded the total amount of exports to Germany and jumped to the top of Italy's export destination country. Mr. LOSMA also took his company LOSMA as an example to illustrate the good development of Italian machine tools this year. The company's sales in the first quarter of 2011 increased 52.5% year-on-year.

In 2011, the growth rate of the Tian Tian China market is expected to reach 25%. In an interview with a reporter from the China Industry News, Mr. Takada pointed out that "China's economic development is too fast and the growth rate of the market is too high. Tiantian must strengthen the operation of the brand strategy and strive to keep up with the development requirements of the Chinese market."

EMAG Machine Tool Group is a German company that produces vertical lathes. He Haoran, president of EMAG China, said at CIMT2011 that even if EMAG's growth rate in China does not double in 2011, it is not far behind. The reason why they have such lofty courage is because they have the best performance in 2010: In 2010, China's market output value was 500 million yuan, which has doubled from the previous year. He Haoran also announced that to increase the production of EMAG's Chinese factory, the area of ​​the Taicang factory will be doubled. At the same time, it is also preparing to set up a new factory in Nanjing to produce parts and components. In the future, it will form a production base in Nanjing and a technical center in Taicang.

Since the general expectation of the Chinese market is good, many foreign companies have deployed in China. In addition to establishing a production base, they also established a number of related institutions and facilities to better conduct business in China. Hano, president of DMG China, said that in 2011 DMG China will double its production and plan to set up a technology center in Xi’an in 2011. Tian Tian is prepared to invest 25 million U.S. dollars to invest in the establishment of a financial services company in China, and adopt financing leasing, installments, etc. to raise funds for customers.

Survey Report: CIMT2011 International Exhibitor Investigation Report In April 2011, the 12th China International Machine Tool Exhibition (CIMT2011) was held in Beijing. International exhibitors from 29 countries including Germany, the United States, and Japan accounted for half of all exhibitors. Its exhibition area is even up to 50%. International well-known companies in the machine tool industry also participated in the exhibition, such as DMG, Shriver, Emark, Haas, Mazak, Doosan, Sodick, Otsuka, Reese GF AgieCharmilles, Hammer, Inde Kesi, Mori Seiki, etc. These international exhibitors showcased their latest products and technologies, many of which were exhibited for the first time in China.

In order to investigate the development of international machine tool companies and the current status of China's machine tool market, "China Industry News" carried out surveys of machine tool foreign companies at the exhibition, issued 120 questionnaires, recovered 96 copies, and obtained a large amount of detailed data. It was collected on April 12, 2011. The surveyed companies include Swiss Spokker CNC (Shanghai) Co., Ltd., Italian MCM processing center, machine tool manufacturing company JOBS in Italy, Belgium's sheet metal processing equipment manufacturer LVD, Germany's Jimat Group.

Among the respondents, the number of other managers (24%), middle-level managers and managers (23%) was the highest, followed by skilled workers (13%). This shows that in addition to providing basic management personnel for the exhibition, foreign companies also transferred a large number of technicians to the site to meet the demand of customers and visitors for technical knowledge. In addition, the industry distribution of the surveyed companies was: tool (24%), numerical control system (20%), machining center (16%), large and heavy machine tools (12%), and gold-cutting machine tools (10%). The self-sufficiency rate of China's functional components is relatively low, especially for those key and high-end components that need to be imported from abroad. The number of foreign companies participating in the exhibition with cutting tools and numerical control systems is large. It also shows that foreign companies are precisely targeting this market gap and launching Sales in the Chinese market.

As shown in Figure 1, 67% of the surveyed companies are optimistic about the Chinese market, and believe that the future of the Chinese machine tool industry is still very big, followed by 22% of the surveyed companies. They think that the Chinese machine tool industry will develop in the future. However, the growth rate will slow down. Only 8% of the respondents believe that the current situation is unclear.

"China is the largest market for machine tool consumption." This is a consensus reached by many international exhibitors. Dr. Capi, chairman of the Board of Directors of the world-famous machine tool manufacturer Jimmite Group, said at the show that China accounted for 13% of the entire DMG Group's sales share. China is DMG's second largest market after Germany. It is expected that in 2011 Dimaje's DMG machinery products will reach sales of 14 billion euros worldwide.

The high attention to the Chinese market has prompted many international exhibitors to gradually realize localized production in China.

In 2002, DMG built its factory in Shanghai, and some of its products have already achieved 100% local production. For example, DMG's Ecoline series products developed for the Chinese market are completely produced domestically. At the same time, the products produced by DMG in Shanghai are exported to the rest of the world in addition to domestic sales. Not only DMG, but also many foreign companies such as Shriver, Emark, and Haas also invested in factories in China.

According to the survey, 57% of the foreign investors interviewed stated that they have established a number of processing plants in Shanghai, China and Wuhan. Not only that, 58% of the respondents said that they will have new investment plans in the Chinese market this year. For example, Shanghai Robot Co., Ltd. plans to carry out a functional expansion of the new plant this year, and Makino Machine Tool Co., Ltd. stated that it has a high investment quota in the Chinese market this year.

When asked, "How are you evaluating the latest technologies and products for this show?" 46% of respondents believe that there are many new technologies and products at this year's machine tool show, and 27% of the respondents believe that There are not many technologies and products (see Figure 2 for details). Wu Bolin, executive vice president of the China Machine Tool & Tooling Industry Association, said that many foreign exhibitors are presenting their latest products, and many products have made their debut in China. For example, DMG chose to display 28 machines with the best performance and exhibited two new CTXdelta and DMU600P machines in the world for the first time. EMAG's K200 gear hobbing machine is a heavy hitter, and it is a perfect combination of advanced technology and extreme versatility and femininity.

The survey shows that the vast majority of foreign companies have participated in the CIMT, and nearly 92% of the respondents said they participated in previous exhibitions, and many companies participate every time. From the survey of the activities of interest of foreign companies, it can be found that they have a strong interest in exhibits and technology promotion activities (63%), and their response to the opening ceremony is even. At the same time, the technology exchange lectures were also widely welcomed by foreign companies, and its acceptance rate reached 27%. This statistic shows that the survey is consistent with the main purpose of most exhibitors. Exhibitors are exhibiting, on the one hand, to display their latest technological achievements and to negotiate business with customers. On the other hand, they are to understand and learn the latest technological achievements of other peers and the status quo and trends of the development of the machine tool industry. It is understood that only one company, MAG AIG Industrial Automation (Shanghai) Co., Ltd., organized 10 technical exchange seminars on the subject of “the latest processing technologies and solutions for key industries such as aerospace, automotive and other industries” that attracted many Audience.

Due to the attractiveness of the Chinese market and the international influence of the exhibition, according to the survey, 78% of foreign investors reached and initially reached the goal of promoting products, technology and communication.

In addition, most of the foreign exhibitors stated that their sales in the Chinese market were good. As shown in Figure 3, 66% of the foreign-invested enterprises surveyed have relatively satisfactory sales in China's machine tool market, and another 33% of foreign-funded enterprises have normal sales in China.

Despite being regarded as the world’s second largest economy and “manufacturing power”, our country’s machine tool production is only large and not strong. As shown in Figure 4, only 14% of foreign companies treat Chinese counterparts as their competitors. Among the major competitors they ranked, European companies ranked first in 43%; followed by Japan and other Asian countries, 24%; and third, the United States and other countries in the Americas, 15%.

Since 2006, China has attached great importance to the development of the equipment manufacturing industry. In 2009, it began to implement major special CNC machine tools for the machine tool industry, and has achieved certain results. The survey results show that nearly half (46%) of the foreign investors surveyed do not regard this policy as a threat. They believe that China's relevant support policies will not affect its investment and development in the Chinese market. Only 27% of foreign investors believe that these supporting policies have a great impact on them and they propose to cancel these policies. According to statistics, imported and original products in the domestic high-end machine tool market accounted for 85%, while more than 70% of domestic CNC machine tools were produced from simple economical CNC machines with low added value. As a capital-intensive and technology-intensive machine tool industry, core technology is still the key to the development of machine tool companies. If it is only through the promotion of national policies, whether the industry can achieve technological and institutional breakthroughs is still open to question. It is the market, the demand, and the constant innovation of technology.